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THE ECONOMY
of 1990, before recovering to an increase of about six per cent in the fourth quarter. The performance of domestic exports should, however, be viewed against the continued rapid increase in re-exports of China origin. A significant part of these re-exports were in fact products of outward processing arrangements made between Hong Kong companies and manufacturing entities in China.
Domestic exports to the various major markets showed a mixed trend in 1990. Compared with 1989, domestic exports to China rose by eight per cent in real terms. Over 70 per cent of these domestic exports were related to outward processing arrangements commissioned by Hong Kong manufacturers. Domestic exports to Germany rose by eleven per cent in real terms, supported by the robust economic performance in this market. However, following several years of rapid growth, domestic exports to Japan fell by eight per cent in real terms. Domestic exports to the United States and the United Kingdom also declined, by 10 per cent and nine per cent respectively in real terms. Slow economic growth and slack domestic demand in these two markets led to the decreases. While the United States remained the largest market for Hong Kong's domestic exports, its share continued to fall, to 29 per cent in 1990, from 33 per cent in 1988 and 32 per cent in 1989.
Analysed by major product categories, domestic exports of clothing and textiles in 1990 fell in real terms by one per cent and two per cent respectively from 1989. Their shares in the total value of domestic exports in 1990 were 32 per cent and seven per cent respectively. Domestic exports of radios showed the largest decline (by 30 per cent in real terms), followed by domestic exports of electrical appliances (by 22 per cent) and of metal manufactures (by 16 per cent). On the other hand, domestic exports of electronic components and of watches and clocks grew in real terms by 18 per cent and 12 per cent respectively.
In 1990, re-exports showed a marked increase over 1989, by 20 per cent in value terms or about 16 per cent in real terms. This compared with an increase of 26 per cent in value terms, or 19 per cent in real terms, recorded in 1989.
China remained the largest source of, as well as the largest market for, Hong Kong's re-exports. Re-exports of China origin continued to rise rapidly in 1990. Re-exports to China rebounded significantly in the second half of the year, following a decline in the first half. Meanwhile, re-exports not related to China also grew significantly. The other major re-export markets were the United States, Japan, Germany, Taiwan and the Republic of Korea. The major suppliers of Hong Kong's re-exports, apart from China, were Japan, Taiwan, the United States and the Republic of Korea.
Analysed by end-use categories, Hong Kong's re-exports comprised mostly raw materials and semi-manufactures, and consumer goods, which represented 31 per cent and 53 per cent respectively of the total value of re-exports in 1990. Re-exports of footwear, textile fabrics, electrical machinery and appliances, clothing and radios showed more rapid increases than re-exports of other commodity items.
Imports grew by 14 per cent in value terms or by about 11 per cent in real terms in 1990, compared with corresponding increases of 13 per cent and nine per cent in 1989. The major sources of Hong Kong's imports were China, Japan, Taiwan, the United States, the Republic of Korea and Singapore. A large part of the growth in imports was attributable to the continued surge in re-export trade.
As regards retained imports, there was an increase of about seven per cent in real terms in 1990, with a decline of three per cent in the first half of the year and an increase of about